DCIT, New Delhi V. M/s. Parasram Holdings Pvt. Ltd, New Delhi

ITA 2871/DEL/2009

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7922 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 10-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 12-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAKHI BIM AL
• Assessee Lawyers: T R TALWAR
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI C.M. GARG: JUDICIAL MEMBER ITA NO. 2871/DEL/2009 ASSTT. YR: 2006-07 DCIT CIRCLE 8(1), VS. PARASRAM HOLDINGS PVT. LTD ., NEW DELHI. B-7, SPH HOUSE, NIMRI COLONY, BHARAT NAGAR, NEW DELHI. PAN: AAACS 4487 J ( APPELLANT ) (RESPONDENT) APPELLANT BY : MS. RAKHI BIMAL SR. DR RESPONDENT BY : SHRI T.R. TALWAR ADV. DATE OF HEARING : 10/05/2016. DATE OF ORDER : 12/05/2016. O R D E R PER S.V. MEHROTRA, A.M: THIS IS REVENUES APPEAL ASSAILING THE ORDER DATE D 31.03.2009, PASSED BY THE LD. CIT(A)-XI, NEW DELHI IN APPEAL NO. 234/0 8-09, FOR A.Y. 2006- 07. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS NSE/BSE BROKER AND IS ALSO A DEPOSITORY PARTICIPANT OF NSDL, DERIVING INC OME FROM BROKERAGE, CLEARING CHARGES, DEPOSITORY RECEIPTS, DIVIDENDS, I NTEREST AND FROM SECURITIES TRANSACTIONS. FOR AY 2006-07 THE ASSESSEE FILED IT S RETURN DECLARING AN INCOME OF RS. 12,65,26,600/-. THE AO NOTICED THAT A SSESSEE HAD CLAIMED 2 DEDUCTION U/S 88E AMOUNTING TO RS. 2,01,95,009/-, W HICH WAS WORKED OUT AS UNDER: TOTAL INCOME AS PER COI 12,65,26,600/- TAX ON ABOVE INCOME 3,79,57,980/- TOTAL STT PAID 2,01,95,009/- DEDUCTION U/S 88E RESTRICTED TO RS. 2,01,95,009/ - I.E. UPTO TOTAL TAX PAYABLE AS PER COMPUTATION OF INCOME. 3. AO POINTED OUT THAT THE ASSESSEES INCOME/ RECEI PTS COMPRISED OF FOLLOWING: 1. BROKERAGE INCOME & OTHER RECEIPTS 23,97,91,622/- 2. INCOME FROM SECURITY TRANSACTION 10,23,41,879/- 3. OTHER INCOME 2,60,16,534/- TOTAL RECEIPTS/ INCOMINGS 36,81,50,076/- 4. FROM THIS COMPUTATION THE AO CONCLUDED THAT ASSE SSEE HAD CLAIMED DEDUCTION U/S 88E ON INCOMES APART FROM INCOME FROM SECURITY TRANSACTIONS. HE COMPUTED THE ADMISSIBLE DEDUCTION U/S 88E AT RS. 1,88,85,064/- AS UNDER: A) BROKERAGE ETC. 23,97,91,663 LESS: SUB BROKERAGE 13,19,26,012 10,78,65,651 B) INCOME FROM SECURITIES TRANSACTIONS 10,23,41,879 C) OTHER INCOME 2,60,16,534 LESS: INTEREST PAID 87,74,910 LESS: NSDL EXP. 36,34,151 1,36,07,473 2,38,15,003 STT CLAIMABLE TAX X INCOME FROM SECURITIES TOTAL INCOME =4,13,00,042 X 10,23,41,879 22,38,15,003 = 1,88,85,064 TOTAL STT CLAIMABLE. 3 5. BEFORE LD. CIT(A) THE ASSESSEE HAD POINTED OUT T HAT TO JUSTIFY THE AMOUNT OF CLAIM, THE ASSESSEE HAD GIVEN TWO BASIS O F CALCULATION. ONE WAS BASED ON TOTAL TURNOVER FIGURES AS CERTIFIED BY NSE AND BSE. ON THIS BASIS, TOTAL CLAIMABLE AMOUNT ON AVERAGE RATE OF INCOME TA X COMES TO RS. 2.75 CRORES. AS AGAINST IT, THE ASSESSEE HAD RESTRICTED THE CLAIM ONLY TO RS. 2.02 CRORES I.E. ON ACTUAL PAYMENT BASIS. THE SECOND BAS IS WAS CALCULATION OF STT CLAIMABLE ON THE BASIS OF INCOME AFTER DEDUCTION OF DIRECT EXPENSES. STT CLAIMABLE AMOUNTED TO RS. 2.05 CRORES BUT RESTRICTE D TO 2.02 CRORE. 6. THE ASSESSEE FURTHER POINTED OUT THAT AO ACCEPTE D THE SECOND METHOD OF CALCULATION OF AVERAGE RATE OF INCOME TAX BUT AR BITRARILY DELETED DIRECT EXPENDITURE INCURRED ON BROKER STAMP DUTY, VSAT EXP ENSES AND NSEIL/BSE EXPENSES. 7. LD. CIT(A) WHILE PARTLY ALLOWING THE ASSESSEES APPEAL DIRECTED THE AO TO GRANT FULL REBATE ON STT PAID BY THE ASSESSEE . 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE GONE THROUGH THE DETAILED COMPUTATION SUBMITTED BY ASSES SEE WHICH IS ANNEXURE I & 2 TO CIT(A)S ORDER. SINCE THE AO HAS PRIMARILY G ONE BY THE SECOND MODE OF COMPUTATION, THEREFORE, WE ARE CONSIDERING ANNEX URE II ONLY. THE SHORT CONTROVERSY IS THAT HOW MUCH EXPENSE DEBITED TO P&L A/C ARE ATTRIBUTABLE TO INCOME FROM SECURITIES TRANSACTION WHICH IS RS. 10, 23,41,879/-. THE AO SIMPLY REDUCED SUB-BROKERAGE FROM BROKERAGE INCOME AND REDUCED INTEREST PAID AND NSEIL EXPENSES FROM OTHER INCOME FOR ARRIV ING AT TOTAL INCOME. HE DID NOT TAKE INTO CONSIDERATION THE BROKERAGE, STAM P DUTY AND VSAT EXPENSES, WHICH WERE ALSO REQUIRED TO BE ALLOCATED TO BROKERAGE INCOME. THE 4 NATURE OF EXPENSES ITSELF SUGGESTS THAT THEY WERE D IRECTLY RELATABLE TO THE EARNING OF BROKERAGE INCOME HENCE THEY WERE TO BE A LLOCATED TO THE BROKERAGE INCOME WHICH WOULD REDUCE BROKERAGE INCOM E BY THAT AMOUNT. 8.1. LD. CIT(A) HAS RIGHTLY OBSERVED THAT ONCE THAT IS DONE THE PROPORTION OF ST INCOME TO TOTAL GROSS INCOME WOULD AUTOMATICA LLY INCREASE. HE HAS FURTHER RIGHTLY OBSERVED THAT IN THIS COMPUTATION A LLOCATION OF INDIRECT EXPENSES IN PROPORTION TO GROSS INCOME WILL NOT MAK E ANY DIFFERENCE SO FAR AS THE RATIO OF ST INCOME TO TOTAL INCOME IS CONCER NED. 8.2. AFTER GOING THROUGH THE DETAILED REASONING GIV EN BY LD. CITA), WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THE SAME IS UPHELD. 9. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCEMENT IN OPEN COURT ON 12/05/2016. SD/- SD/- (C.M. GARG) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12/05/2016. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.